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Banks and federally chartered trust and loan companies are required to transfer to the Bank of Canada all unclaimed bank balances maintained in Canada in Canadian currency that have been inactive for a period of 10 years.

Tamon Takamura

Senior Economist

Tamon Takamura is a Senior Economist in the Financial Studies Division in the Financial Stability Department. He is a macroeconomist whose primary interests include macroeconomic implications of real-financial linkages and monetary economics. Specific topics include banks’ capitalization, capital regulations and transmission mechanisms of monetary policy. Tamon Takamura received his PhD in economics from the Ohio State University.

This note examines the merits of monetary policy adjustments in response to financial stability concerns, taking into account changes in the state of knowledge since the renewal of the inflation-targeting agreement in 2011. A key financial system vulnerability in Canada is elevated household indebtedness: as more and more households are nearing their debt-capacity limits, the likelihood and severity of a large negative correction in housing markets are also increasing.

In a simple two-sector New Keynesian model, sticky prices generate a counterfactual negative comovement between the output of durable and nondurable goods following a monetary policy shock. We show that heterogeneous factor markets allow any combination of strictly positive price stickiness to generate positive output comovement.

During the recent financial crisis in the U.S., banks reduced new business lending amidst concerns about borrowers’ ability to repay. At the same time, firms facing higher borrowing costs alongside a worsening economic outlook reduced investment.

Other

Journal Articles

Other research

“Optimal Monetary Policy at the Zero Interest-Rate Bound: The Case of Endogenous Capital Formation,”
(with T. Kudo and T. Watanabe), Research Center for Price Dynamics Working Paper Series No.3, November 2006